Daiwa Securities has lifted its target price for sportswear maker 361 Degrees (01361) to HK$5.40 from HK$4.70, reflecting 7.5 times forecast price-to-earnings ratio for the next 12 months, while reiterating its "outperform" rating on the stock.

The brokerage noted that 361 Degrees posted an 8% year-on-year increase in first-half revenue, with gross margin reaching 41.8% and net profit growing 8% year-on-year. These results were in line with both Daiwa's and market expectations, putting the company on track to achieve its full-year guidance of 8% to 10% revenue growth, gross margin between 41% and 42%, and positive net profit expansion.

Daiwa believes 361 Degrees is well-positioned to benefit from China's K-shaped consumption trend, with its value-for-money positioning providing greater resilience compared to peers. The company recently appointed Simon Men, a former vice president of sales at Nike China, and the brokerage expects more top-tier international brand talent to join, potentially enhancing product offerings, distribution channels, and operational execution.

Looking ahead, 361 Degrees will host order conferences for the first and second quarters of next year, with Daiwa estimating high single-digit order growth during those events.